NOTE
1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS
Under
Delaware laws, the founders incorporated the Company as Forex Development Corporation on January 21, 2016. On February 27, 2018, the
Company changed its name to FDCTech, Inc. The name change reflects the Company’s commitment to expanding its products and services
in the FX and cryptocurrency markets for OTC brokers. The Company provides innovative and cost-efficient financial technology (‘fintech’)
and business solutions to OTC Online Brokerages and cryptocurrency businesses (“customers”).
The
Company intends to build a diversified global financial services company driven by proprietary Condor trading technologies, complementary
regulatory licenses, and a proven executive team. The Company plans to acquire, integrate, transform, and scale legacy financial service
companies. The Company believes that its proprietary technology and software development capabilities allow legacy financial services
companies immediate exposure to –forex, stocks, ETFs, commodities, crypto, social/copy trading, and other high-growth fintech markets.
From
December 2021 onwards, the Company expects to grow from its acquisition strategy, specializing in buying and integrating small to mid-size
legacy financial services companies. The Company intends to build a diversified global software-driven financial services company. The
Company plans to acquire, integrate, transform, and scale legacy financial service companies. The Company replaces conventional legacy
software infrastructure with its regulatory-grade proprietary Condor trading technologies, intending to improve end-user experience,
increase client retention, and realize cost synergies.
On
December 22, 2021, the Company entered into a Share Exchange Agreement (the “Agreement”) with AD Financial Services Pty Ltd
ACN 628 331 117 of Level 38/71 Eagle St, Brisbane, Queensland, Australia, 4000 (“ADFP” or “Target”). According
to the Agreement, the Company acquired 51% of ADFP’s issued and outstanding shares of capital stock in exchange for 45,000,000
(the “Consideration”) newly issued “restricted” common shares. The operating and licensed entity of ADFP is AD
Advisory Services Pty Ltd. ADFP owns one hundred percent (100%) equity interest in AD Advisory Services Pty Ltd (“ADS”).
As a result, the Company is 51% owner of ADS. The Company closed the acquisition on December 22, 2021 and combined the financial statements
of ADS in its annual report, 10-K, filed with the SEC on March 28, 2022.
Post-acquisition
of ADS, we have two primary business segments, (1) Wealth Management and (2) Technology and Software Development.
Wealth
Management
AD
Advisory Services Pty Ltd. (ADS) is an Australian-regulated wealth management company with 20 offices, 28 advisors, and $530+ million
in funds under advice. ADS provides licensing solutions for financial advisers & accountants in Australia. ADS offers different licensing,
compliance, and education solutions to financial planners to meet the specific needs of their practice.
ADS’
revenues, cost of sales, and gross profits for the nine months ended September 30, 2022, were $4.35 million, $3.94 million, and $0.41
million, respectively.
On
July 19, 2022, the Company signed a non-binding letter of intent to acquire eighty percent (80%) equity interest in CIM Securities, LLC
(“CIM Securities”), a FINRA and SIPC member firm. On September 30, 2022, the Company paid a $20,000 non-refundable deposit
and transferred $180,000 to the escrow account to complete the transaction. The FINRA Rule 1017 requires the Company to file continuing
membership applications (CMAs) as it plans to apply for changes in ownership, control, and business
operations. The Company expects to file the CMA form by the end of fiscal 2022.
NOTE
1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS (continued)
Technology
& Software Development
The
Company secures and earns revenues by signing an agreement with its customers. The Company considers a signed agreement with its customers,
a binding contract with the customer, or other similar documentation reflecting the terms and conditions under which the Company will
provide products or services as persuasive evidence of an arrangement. Each agreement is specific to the customer and clearly defines
each party’s fee schedule, duties and responsibilities, renewal and termination terms, confidentiality agreement, dispute resolution,
and other clauses necessary for such a contract. The material terms of contracts with customers depend on the nature of services and
solutions. Each contract is specific to the customer and clearly defines each party’s fee schedule, duties and responsibilities,
renewal and termination terms, confidentiality agreement, dispute resolution, and other clauses necessary for such contract.
The
consolidated revenues, cost of sales, and gross profits for Technology and Software Development for the nine months ended September 30,
2022, were $249,000, $140,019, and $108,981, respectively.
The
Company is a technology provider and software developer in the cryptocurrency or digital asset space. The Company does not mine any digital
assets or trade or act as a counterparty in cryptocurrencies. Consequently, the Company does not intend to register as a custodian with
state or federal regulators, including but not limited to obtaining a money service business or money transmitter license with Financial
Crimes Enforcement Network (FinCEN) and respective State’s money transmission laws. The Company also does not need to register
under the Securities Exchange Act of 1934, as amended, as a national securities exchange, an alternative trading system, or a broker-dealer
since the Company is not a broker-dealer nor does it intend to become a broker-dealer. Customers sometimes compensate us in Bitcoin through
our custodian Gemini Trust Company, LLC (“Gemini”). Gemini is a licensed New York trust company that undergoes regular bank
exams and is subject to cybersecurity audits conducted by the New York Department of Financial Services.
We
are a development company in the financial technology sector with limited operations. The Company has prepared consolidated financial
statements on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in
the ordinary business course.
The
Company has no patents or trademarks on its proprietary technology solutions.
The
Company has three sources of revenue.
| |
● |
Consulting Services
– The Company’s turnkey business solutions - Start-Your-Own-Brokerage (“SYOB”), Start-Your-Own-Prime
Brokerage (“SYOPB”), Start-Your-Own-Crypto Exchange (“SYOC”), FX/OTC liquidity solutions, and lead generations. |
| |
|
|
| |
● |
Technology Solutions
– The Company licenses its proprietary and sometimes acts as a reseller of third-party technologies to customers. Our proprietary
technology includes but is not limited to Condor Risk Management Back Office (“Condor Risk Management”), Condor Pro Multi-Asset
Trading Platform (previously known as Condor FX Pro Trading Terminal), Condor Pricing Engine, Crypto Web Trader Platform, and other
cryptocurrency-related solutions. |
| |
|
|
| |
● |
Customized Software
Development – The Company develops software for Customers with unique requirements outlined in the Software Development
Agreement (“Agreement”). |
In
the retail foreign exchange trading space, where individuals speculate on the exchange rate between different currencies, our customers
are forex brokerages, prime of prime brokers, prime brokers, and banks. The Company generates revenues by licensing its trading technology
infrastructure, including but not limited to the trading platform (desktop, web, mobile), back office, and CRM and banking integration
technology.
The
Company acts as an adviser/strategic consultant and reseller of its proprietary technologies in the cryptocurrency and blockchain space.
The Company expects to generate additional revenue from its crypto-related solutions. Such solutions include revenues from the development
of a custom crypto exchange platform for customers, the sale of the non-exclusive source code of the crypto exchange platform to third
parties, white-label fees of crypto exchange platforms, and the sale of aggregated cryptocurrency data price feed from various crypto
exchanges to OTC brokers. The Company initially plans to develop the technology architecture of the crypto exchange platform for its
customers. The initial capital required to produce such technologies comes from our customers as the Company takes on design-build software
development projects for customers. The Company develops these projects to meet the customer’s design criteria and performance
requirements.
The
Company has completed the Condor Pro Multi-Asset Trading Platform, previously known as the Condor FX Trading Platform. The Condor Pro
Multi-Asset Trading Platform is a commercial trading platform targeted at day traders and retail investors. The industry characterized
such platforms by their ease of use and helpful features, such as the simplified front-end (user interface/user experience), back-end
(reporting system), news feeds, and charting system. The Condor Pro Multi-Asset Trading Platform includes risk management (dealing desk,
alert system, margin calls, etc.), a pricing engine (best bid/ask), and connectivity to multiple liquidity providers or market makers.
We have tailored the Condor Pro Multi-Asset Trading Platform to different markets, such as forex, stocks, commodities, cryptocurrencies,
and other financial products.
The
Company released, marketed, and distributed its Condor Pro Multi-Asset Trading Platform in the second quarter of the fiscal year, December
31, 2019. The Company has developed the Condor Back Office API to integrate third-party CRM and banking systems into Condor Back Office.
The
Company has six (6) licensing agreements for its Condor Pro Multi-Asset Trading Platform. The Company is continuously negotiating additional
licensing agreements with several retail online brokers to use the Condor Pro Multi-Asset Trading Platform. Condor Pro Multi-Asset Trading
Platform is available in desktop, web, and mobile versions.
The
Company’s upgraded Condor Back Office (Risk Management) meets various jurisdictions’ regulatory requirements. Condor Back
Office meets the directives under the Markets in Financial Instruments Directive (MiFID II/MiFIR), legislation by European Securities
and Market Authority (ESMA) implemented across the European Union on January 3, 2018.
The
Company is developing the Condor Investing & Trading App, a simplified trading platform for traders with varied experiences in trading
stocks, ETFs, and other financial markets from their mobile phones. The Company expects to commercialize the Condor Investing & Trading
App by the end of the second quarter of the fiscal year ended December 31, 2022.
The
Company had developed NFT Marketplace, a decentralized NFT marketplace, a multichain platform with a lazy minting option to reduce and
limit unnecessary blockchain usage fees, also known as gas fees. The Company expects to commercialize the NFT Marketplace by the end
of the fourth quarter of the fiscal year ended December 31, 2022.
The
Company and its subsidiary, ADS, are developing a digital wealth management company, which will initially include a Robo Advice Platform
catering to Australia’s wealth management industry. The Company expects to commercialize the Robo Advice Platform by the fiscal
year ending December 31, 2022.
Subsidiaries
of the Company
AD
Advisory Services Pty Ltd. (ADS) is an Australian-regulated wealth management company with 20 offices, 28 advisors, and $530+ million
in funds under advice. ADS provides licensing solutions for financial advisers & accountants in Australia. ADS offers different licensing,
compliance, and education solutions to financial planners to meet the specific needs of their practice. ADS’ revenues, cost of
sales, and gross profits for the nine months ended September 30, 2022, were $4.35
million, $3.94
million, and $0.41
million, respectively.
Settlement
of the FRH Group Note
Between
February 22, 2016, and April 24, 2017, the Company borrowed $1,000,000 from FRH Group, a founder and principal shareholder (“FRH”).
The Company executed Convertible Promissory Notes, due between February 28, 2018, and April 24, 2019. The Notes were convertible into
common stock initially at $0.10 per share but may be discounted under certain circumstances. In no event will the conversion price be
less than $0.05 per share with a maximum of 20,000,000 shares if FRH converts the entire subject to adjustments in certain circumstances.
On February 22, 2021, the Company entered into an Assignment of Debt Agreement (the “Agreement”) with FRH and FRH Group Corporation.
The Company eliminated all four FRH Group convertible notes, including interest, of $1,256,908, in return for the issuance of 12,569,080
of unregistered common stock of the Company (the “Shares”) to FRH. Following the Agreement, FRH assigned the Shares to FRH
Group Corporation, also owned by Mr. Hong.
Termination
of Acquisition of Genesis Financial, Inc.
In
line with the new strategic direction, on June 2, 2021, the Company entered into a Stock Purchase Agreement (the “Genesis Agreement”)
with the Shareholders of Genesis Financial, Inc., a Wyoming corporation (“GFNL” or “Seller”). According to the
Agreement, the Company plans to acquire 100% of the issued and outstanding equity interests of GNFL, including its wholly-owned subsidiaries
and other variable interest entities, in consideration for 70,000,000 shares of the Company’s restricted common stock (the”
“Securities”) valued at thirty-five Million U.S. Dollars ($35,000,000).
On
August 24, 2021, FDCTech, Inc., a Delaware corporation (“FDCT” or the “Company” or “Buyer”), terminated
the Stock Purchase Agreement (the “Agreement”), dated June 2, 2021, with the Shareholders of Genesis Financial, Inc., a Wyoming
corporation (“Genesis” or “Seller”). As of the termination date, the Company did not issue any Securities to
the Seller. The Company could not complete nor qualify the Agreement as Genesis could not comply with several non-exhaustive material
provisions, covenants, or conditions.
On
June 9, 2021, and in connection with the previous description of the Genesis Agreement, dated June 2, 2021, the Company appointed Warwick
Kerridge as Chairman of the Company’s Board of Directors. Effective August 24, 2021, the Company terminated the appointment of
Warwick Kerridge as the Board of Directors. The Company approved the termination upon the consent of the majority of the stockholders
representing at least 68.73% of the issued and outstanding shares of the Company. The Company authorized the action according to Section
222 of the General Corporation Law of Delaware.
Equity
Line of Credit
On
October 04, 2021, the Company filed a prospectus that relates to the resale of up to 22,670,000 shares of our Common Stock issued or
issuable to selling shareholders for up to $2,200,000, including (i) up to 2,000,000 shares issued to AD Securities America, LLC, (ii)
up to 20,000,000 issuable to White Lion Capital, LLC (“White Lion”), according to a “Purchase Notice Right” under
an Investment Agreement and (iii) 670,000 shares issued to White Lion as a commitment fee associated with the Investment Agreement. The
Company has executed eight “Purchase Notice Rights” under an Investment Agreement with White Lion and received a net of $125,112
after deducting financing costs associated with the Investment Agreement from October 04, 2021, to September 30, 2022. The commitment
period for the equity line of credit expired on May 1, 2022.
Our
cash balance is $246,064 and $93,546 as of September 30, 2022, and December 31, 2021. The Company did not receive additional funding
from U.S. Small Business Administration (SBA) or Cares Act Paycheck Protection Program during the fiscal year ending December 31, 2021.
Governmental
Regulation
FDCTech
is a publicly traded company subject to SEC and FINRA’s rules and regulations regarding public disclosure, financial reporting,
internal controls, and corporate governance.
Our
wealth management business, AD Advisory Services (ADS), is subject to enhanced regulatory scrutiny and is regulated by multiple
regulators in Australia. The Australian Securities and Investments Commission (ASIC) administers a licensing regime for
‘financial services providers. ADS holds an Australian Financial Services License (AFSL) and meets various compliance,
conduct, and disclosure obligations.
Board
of Directors
Effective
January 1, 2021, Naim Abdullah resigned as the Director of the Company.
On
July 6, 2021, the Board of Directors of FDCTech, Inc. (the “Company”) increased from four to five directors and appointed
Charles R. Provini, age 74, to the vacancy. Mr. Provini is considered independent under NYSE and NASDAQ listing standards. Mr. Provini
has been the Chairman, CEO, and President of Natcore Technology Inc. since May 2009, a research and development company protected by
65 patents granted or pending. From November 1997 to October 2000, he was the President of Ladenburg Thalmann Asset Management and a
Director of Ladenburg Thalmann, Inc., one of the oldest members of the New York Stock Exchange. He served as President of Laidlaw Asset
Management and Chairman and Chief Investment Officer of Howe & Rusling, Laidlaw’s Portfolio Management Advisory Group, from
November 1995 to September 1997. Mr. Provini served as President of Rodman & Renshaw’s Advisory Services from February 1994
to August 1995. He was the President of LaSalle Street Corporation, a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette, from
January 1983 to April 1985. Mr. Provini has been a leadership instructor at the U.S. Naval Academy, Chairman of the U.S. Naval Academy’s
Honor Board, and is a former Marine Corp. officer. Mr. Provini holds an undergraduate Engineering degree from the U.S. Naval Academy
in Annapolis, Maryland, and a post-graduate degree from the University of Oklahoma.
Upon
termination of Mr. Kerridge, effective August 24, 2021, the Company had four Board of Directors. Mitchell M. Eaglstein shall be the acting
Chairman of the Company. Mitchell M. Eaglstein and Imran Firoz are the executive directors of the Company. Jonathan Baumgart and Charles
R. Provini are independent directors under NYSE and NASDAQ listing standards.
On
November 30, 2021, Charles R. Provini, a member of the Board of Directors of FDCTech, Inc. (the “Company”), notified the
Company of his intention to voluntarily resign from the Company’s Board of Directors effective November 30, 2021. Mr. Provini did
not advise the Company of any disagreement with the Company on any matter relating to its operations, policies, or practices. Upon the
resignation of Mr. Provini, the Company currently has three Board of Directors.
On
September 30, 2022, the Company appointed Gope S. Kundnani as the Director of the Company. Upon the appointment of Mr. Kundnani, the
Company currently has four Board of Directors. Mr. Kundnani is a seasoned entrepreneur with several decades of experience building successful
businesses in the United States, the Middle East, and the United Kingdom. From May 2018 to the present, Mr. Kundnani was the founder
and current Director of Alchemy Prime Markets, a financial brokerage services company regulated by the Financial Conduct Authority (FCA).
From December 2018 to the present, Mr. Kundnani founded and is the Director of Blackthorn Finance Limited, an authorized payments financial
services company regulated by the FCA. From May 2004 to April 2008, Mr. Kundnani was the Director of Tristar Group, responsible for investing
and acquiring small retail businesses in the Texas region. From February 1999 to the present, Mr. Kundnani has been a partner and CEO
of Flexo Pack, a polyethylene product manufacturer with a global customer base. Mr. Kundnani holds an undergraduate business degree from
Mulund College of Commerce, Mumbai, India.
Changes
in Registrant’s Certifying Accountant
On
July 2, 2021, the Board of Directors of FDCTech, Inc. (the “Company”) approved the dismissal of Farber Hass Hurley LLP (“FHH”)
as the Company’s independent registered public accounting firm. The reports of FHH on the Company’s consolidated financial
statements for the fiscal years ended December 31, 2020, and 2019 did not contain an adverse opinion or a disclaimer of opinion. It was
not qualified or modified for uncertainty audit scope or accounting principles.
On
July 2, 2021, the Company appointed BF Borgers CPA PC (“BFB”) as the Company’s new independent registered public accounting
firm, effective immediately, to perform independent audit services for the fiscal year ending December 31, 2021.
Rounding
Error
Due
to rounding, numbers presented in the financial statements for the period ending September 30, 2022 and 2021, and for December 31, 2021,
and throughout the report may not add up precisely to the totals provided, and percentages may not exactly reflect the absolute figures.
Description
of Company’s Securities to be Registered
Effective
September 03, 2021, the Company incorporated by reference the description of its common stock, par value $0.0001 per share, to be registered
hereunder contained under the heading “Description of Securities” in the Company’s Registration Statement on Form S-1
(File No. 333- 221726), as initially filed with the Securities and Exchange Commission (the “Commission”) on November 22,
2017, as subsequently amended (the “Registration Statement”). Since the Registration Statement filing, the Company has made
all required filings pursuant to Section 15(d) and has continued to file all reports voluntarily.
Covid-19
In
March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic throughout the United
States. While the initial outbreak concentrated in China, it spread to several other countries, including Russia and Cyprus, and reported
infections globally. Many countries worldwide, including the United States, have significant governmental measures being implemented
to control the spread of the virus, including temporary closure of businesses, severe restrictions on travel and the movement of people,
and other material limitations on business. These measures have resulted in work stoppages, absenteeism in the Company’s labor
workforce, and other disruptions. The extent to which the coronavirus impacts our operations will depend on future developments. These
developments are highly uncertain. We cannot predict them with confidence, including the duration and severity of the outbreak and the
actions required to contain the coronavirus or treat its impact. In particular, the spread of the coronavirus globally could adversely
impact our operations and workforce, including our marketing and sales activities and ability to raise additional capital, which could
harm our business, financial condition, and operation results.
Ukraine-Russia
Conflict
The
geopolitical situation in Eastern Europe intensified on February 24, 2022, with Russia’s invasion of Ukraine. The war between the
two countries continues to evolve as military activity continues. The United States and certain European countries have imposed additional
sanctions on Russia and specific individuals. By the end of August 2022, the Company closed its technical support and development office
in Russia. We relocated our personnel to Turkey, currently considered a neutral zone. No individual associated with the Company is banned
or under Special Designated Nationals and Blocked Person list. If the military activities worsen and expand in Europe, we may relocate
our office from Turkey to other neutral zones in Asia. If we cannot relocate our technical and development operations to a safer zone,
it may impact our software development capabilities and negatively impact the Company’s business plans.
As
of the date of this report, there has been no disruption in our operations.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation and Principles of Consolidation
The
accompanying consolidated financial statements include the accounts of FDCTech, Inc. and its wholly-owned subsidiary. We have eliminated
all intercompany balances and transactions. The Company has prepared the consolidated financial statements consistent with its accounting
policies in its financial statements. The Company has measured and presented its consolidated financial statements in US Dollars, the
currency of the primary economic environment in which it operates (also known as its functional currency).
Financial
Statement Preparation and Use of Estimates
The
Company prepared consolidated financial statements according to accounting principles generally accepted in the United States of America
(“GAAP”). The preparation of consolidated financial statements in conformity with GAAP requires management to make certain
estimates, judgments, and assumptions. This could affect the reported amounts of assets and liabilities, the related disclosures at the
date of the consolidated financial statements, and the reported amounts of revenue and expenses during the presented periods. Estimates
include revenue recognition, the allowance for doubtful accounts, website and internal-use software development costs, recoverability
of intangible assets with finite lives, and other long-lived assets. Actual results could materially differ from these estimates. Actual
results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties, including uncertainty
in the current economic environment due to the coronavirus (“COVID-19”).
Cash
and Cash Equivalents
Cash
and cash equivalents include cash on hand, deposits held with banks, and other short-term, highly liquid investments with three months
or less of original maturities. On September 30, 2022, and December 31, 2021, the Company had $246,064 and $93,546 cash and cash equivalent
held at the financial institution.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Accounts
Receivable
Accounts
Receivable primarily represents the amount due from four (4) technology customers. In some cases, the customer receivables are due immediately
on demand; however, in most cases, the Company offers net 30 terms or n/30, where the payment is due in full 30 days after the invoice’s
date. The Company has based the allowance for doubtful accounts on its assessment of the collectability of customer accounts. The Company
regularly reviews the allowance by considering historical experience, credit quality, the accounts receivable balances’ age, and
economic conditions that may affect a customer’s ability to pay and expected default frequency rates. Trade receivables are written
off at the point when they are considered uncollectible.
At
September 30, 2022, and December 31, 2021, the Management determined that the allowance for doubtful accounts was $117,487 and $117,487,
respectively. There was no bad debt expense for the three months ended September 30, 2022, and 2021.
Sales,
Marketing, and Advertising
The
Company recognizes sales, marketing, and advertising expenses when incurred.
The
Company incurred $69,692 and $277,327 in sales, marketing, and advertising costs (“sales and marketing”) for the three months
ended September 30, 2022, and 2021. The decrease in expense is mainly due to the reduction in digital marketing costs for the three-month
ended September 30, 2022. The sales, marketing, and advertising expenses represented 4.55% and 375.15% of the sales for the three months
ended September 30, 2022, and 2021.
The
Company incurred $309,140 and $499,320 in sales, marketing, and advertising costs (“sales and marketing”) for the nine months
ended September 30, 2022, and 2021. The increase in expense is mainly due to the rise in digital marketing costs for the nine months
ended September 30, 2022. The sales, marketing, and advertising expenses represented 6.72% and 225.93% of the sales for the nine months
ended September 30, 2022, and 2021.
The
sales and marketing cost mainly included travel costs for tradeshows, customer meet and greet, online marketing on industry websites,
press releases, and public relations activities.
Revenue
Recognition
On
January 1, 2019, the Company adopted ASU 2014-09 Revenue from Contracts with Customers. Most of the Company’s technology and software
revenues come from two contracts – IT support and maintenance (‘IT Agreement’) and software development (‘Second
Amendment’) that fall within the scope of ASC 606.
The
Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
the Company expects to receive in exchange for those goods or services per the contract with the customer. As a result, the Company accounts
for revenue contracts with customers by applying the requirements of Accounting Standards Codification Topic 606, Revenue from Contracts
with Customers (Topic 606), which includes the following steps:
| |
● |
Identify the contract or
contracts and subsequent amendments with the customer. |
| |
● |
Identify all the performance
obligations in the contract and subsequent amendments. |
| |
● |
Determine the transaction
price for completing performance obligations. |
| |
● |
Allocate the transaction
price to the performance obligations in the contract. |
| |
● |
Recognize the revenue when,
or as, the Company satisfies a performance obligation. |
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The
Company adopted ASC 606 using the modified retrospective method applied to all contracts not completed as of January 1, 2019. The Company
presents results for reporting periods beginning after January 1, 2019, under ASC 606, while prior period amounts are reported following
legacy GAAP. In addition to the above guidelines, the Company also considers implementation guidance on warranties, customer options,
licensing, and other topics. The Company considers revenue collectability, methods for measuring progress toward complete satisfaction
of a performance obligation, warranties, customer options for additional goods or services, nonrefundable upfront fees, licensing, customer
acceptance, and other relevant categories.
The
Company accounts for a contract when the Company and the customer (‘parties’) have approved the contract and are committed
to performing their respective obligations. Each party can identify its rights, obligations, and payment terms; the contract has commercial
substance. The Company will probably collect all of the consideration. Revenue is recognized when performance obligations are satisfied
by transferring control of the promised service to a customer. The Company fixes the transaction price for goods and services at contract
inception. The Company’s standard payment terms are generally net 30 days and, in some cases, due upon receipt of the invoice.
The
Company considers the change in scope, price, or both as contract modifications. The parties describe contract modification as a change
order, a variation, or an amendment. A contract modification exists when the parties to the contract approve a modification that either
creates new or changes existing enforceable rights and obligations. The Company assumes a contract modification by oral agreement or
implied by the customer’s customary business practice when agreed in writing. If the parties to the contract have not approved
a contract modification, the Company continues to apply the existing contract’s guidance until the contract modification is approved.
The Company recognizes contract modification in various forms –partial termination, an extension of the contract term with a corresponding
price increase, adding new goods or services to the contract, with or without a corresponding price change, and reducing the contract
price without a change in goods/services promised.
At
contract inception, the Company assesses the solutions or services, or bundles of solutions and services, obligated in the contract with
a customer to identify each performance obligation within the contract and then evaluate whether the performance obligations are capable
of being distinct and distinct within the context of the agreement. Solutions and services that are not capable of being distinct and
distinct within the contract context are combined and treated as a single performance obligation in determining the allocation and recognition
of revenue. For multi-element transactions, the Company allocates the transaction price to each performance obligation on a relative
stand-alone selling price basis. The Company determines the stand-alone selling price for each item at the transaction’s inception
involving these multiple elements.
Since
January 21, 2016 (‘Inception’), the Company has derived its revenues mainly from consulting services, technology solutions,
and customized software development. The Company recognizes revenue when it has satisfied a performance obligation by transferring control
over a product or delivering a service to a customer. We measure revenue based upon the consideration outlined in an arrangement or contract
with a customer.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The
Company’s typic The Company’s typical performance obligations include the following:
| Performance
Obligation |
|
Types
of Deliverables |
|
When
Performance Obligation is Typically Satisfied |
| Consulting Services |
|
Consulting related to Start-Your-Own-Brokerage
(“SYOB”), Start-Your-Own-Prime Brokerage (“SYOPB”), Start-Your-Own-Crypto Exchange (“SYOC”),
FX/OTC liquidity solutions and lead generations. |
|
The Company recognizes
the consulting revenues when the customer receives services over the contract length. If the customer pays the Company in advance
for these services, the Company records such payment as deferred revenue until the Company completes the services. |
| |
|
|
|
|
| Technology Services |
|
Licensing of Condor Risk
Management Back Office (“Condor Risk Management”), Condor FX Pro Trading Terminal, Condor Pricing Engine, Crypto Trading
Platform (“Crypto Web Trader Platform”), and other cryptocurrency-related solutions. |
|
The Company recognizes
ratably over the contractual period that the services are delivered, beginning on the date such service is made available to the
customer. Licensing agreements are typically one year in length with an option to cancel by giving notice; customers have the right
to terminate their agreements if the Company materially breaches its obligations under the agreement. Licensing agreements do not
provide customers the right to take possession of the software. The Company charges the customers a set-up fee for installing the
platform, and implementation activities are insignificant and not subject to a separate fee. |
| |
|
|
|
|
| Software Development |
|
Design and build development
software projects for customers, where the Company develops the project to meet the design criteria and performance requirements
as specified in the contract. |
|
The Company recognizes
the software development revenues when the Customer obtains control of the deliverables as stated in the Statement-of-Work contract. |
The
Company assumes that the goods or services promised in the existing contract will be transferred to the customer to determine the transaction
price. The Company believes that the contract will not be canceled, renewed, or modified; therefore, the transaction price includes only
those amounts to which the Company has rights under the present contract. For example, if the Company enters into a contract with a customer
with an original term of one year and expects the customer to renew for a second year, the Company will determine the transaction price
based on the initial one-year period. When choosing the transaction price, the company first identifies the fixed consideration, including
non-refundable upfront payment amounts.
To
allocate the transaction price, the Company gives an amount that best represents the consideration the entity expects to receive for
transferring each promised good or service to the customer. The Company allocates the transaction price to each performance obligation
identified in the contract on a relative standalone selling price basis to meet the allocation objective. In determining the standalone
selling price, the Company uses the best evidence of the stand-alone selling price that the Company charges to similar customers in similar
circumstances. In some cases, the Company uses the adjusted market assessment approach to determine the standalone selling price. It
evaluates the market in which it sells the goods or services and estimates the price that customers in that market would pay for those
goods or services when sold separately.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The
Company recognizes revenue when it transfers the promised goods or services in the contract. The Company considers the “transfers”
of the promised goods or services when the customer obtains control of the goods or services. The Company considers a customer “obtains
control” of an asset when it can directly use and receive all the remaining benefits from an asset substantially. The Company recognizes
deferred revenue related to services it will deliver within one year as a current liability. The Company presents deferred revenue related
to services that the Company will provide more than one year into the future as a non-current liability.
According
to the technology contract’s terms and conditions, the Company invoices the customer at the beginning of the month for the month’s
services. The invoice amount is due upon receipt. The Company recognizes the revenue at the end of each month, equal to the invoice amount.
AD
Advisory Services Pty (ADS), the Company’s wealth management revenue, primarily consists of advisory revenue, commission revenue
from insurance products, fees to prepare the statement of advice, rebalancing portfolio, and other financial planning activities. We
recognize revenue upon transferring services to customers, reflecting the consideration we expect to receive in exchange for those services.
If we accept payments in advance of services, we defer and recognize them as revenue when satisfied with our performance obligation.
Advisory revenue includes fees charged to clients in advisory accounts for which we are the licensed investment advisor. We bill advisory
fees weekly.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Concentrations
of Credit Risk
Cash
The
Company maintains its cash balances at a single financial institution. The account balances do not exceed FDIC limits as of September
30, 2022, and December 31, 2021.
Revenues
Three
months ended September 30, 2022
Technology
& Software Revenue – The Company generated Technology & Software Revenue of $92,500 and $73,925 for the three months ended
September 30, 2022, and 2021. For the three-month ended September 30, 2022, and 2021, the Company had six (6) and six (6) active customers.
Revenues from the top three (3) customers represented approximately 85.71% and 89.36% of Technology and Software revenue for the three
months that ended September 30, 2022, and 2021.
Wealth
Management Revenue – the Company’s subsidiary ADS generated $1,437,626 in revenue from 28 advisors for the three-month ended
September 30, 2022.
Nine
months ended September 30, 2022
Technology
& Software Revenue – The Company generated Technology & Software Revenue of $249,000 and $221,003 for the nine months ended
September 30, 2022, and 2021. For the nine months ended September 30, 2022, and 2021, the Company had seven (7) and six (6) active customers.
Revenues from the top three (3) customers represented approximately 86.16% and 78.15% of Technology and Software revenue for the three
months that ended September 30, 2022, and 2021.
Wealth
Management Revenue – the Company’s subsidiary ADS generated $4,348,097 in revenue from 28 advisors for the three-month ended
September 30, 2022.
Accounts
Receivable
Accounts
Receivable primarily represents the amount due from three (3) active technology customers. In some cases, the customer receivables are
due immediately on demand; however, in most cases, the Company offers net 30 terms or n/30, where the payment is due in full 30 days
after the invoice’s date. The Company has based the allowance for doubtful accounts on its assessment of the collectability of
customer accounts. The Company regularly reviews the allowance by considering historical experience, credit quality, the accounts receivable
balances’ age, and economic conditions that may affect a customer’s ability to pay and expected default frequency rates.
Trade receivables are written off at the point when they are considered uncollectible.
At
September 30, 2022, and December 31, 2021, the Management determined that the allowance for doubtful accounts was $117,487 and $117,487,
respectively. There was no bad debt expense for the Three Months ended September 30, 2022, and 2021.
Research
and Development (R and D) Cost
The
Company acknowledges that future benefits from research and development (R and D) are uncertain, so we cannot capitalize on R and D expenditures.
The GAAP accounting standards require us to expense all research and development expenditures as incurred.
For
the nine months ended September 30, 2022, and 2021, the Company incurred R and D costs of $1,800
and $15,600.
The R and D costs in the period ending September 30, 2022, were due to evaluating the technological feasibility costs of the Robo
Advice Platform. The R and D costs in the period ending September 30, 2021, were due to evaluating the technological feasibility costs
of the Condor Investing and Trading App.
Legal
Proceedings
The
Company discloses a loss contingency if at least a reasonable possibility that a material loss has been incurred. The Company records
its best estimate of loss related to pending legal proceedings when the loss is considered probable, and the amount can be reasonably
estimated. The Company can reasonably estimate a range of loss with no best estimate; the Company records the minimum estimated liability.
As additional information becomes available, the Company assesses the potential liability of pending legal proceedings, revises its estimates,
and updates its disclosures accordingly. The Company’s legal costs associated with defending itself are recorded as expenses incurred.
The Company is currently not involved in any litigation.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment
of Long-Lived Assets
The
Company reviews long-lived assets for impairment under FASB ASC 360, Property, Plant, and Equipment. Under the standard, long-lived assets
are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
An impairment charge is recognized for the amount if and when the asset’s carrying value exceeds the fair value. There are no impairment
charges on September 30, 2022, and December 31, 2021.
Provision
for Income Taxes
The
provision for income taxes is determined using the asset and liability method. Under this method, deferred tax assets and liabilities
are calculated based upon the temporary differences between the consolidated financial statement and income tax bases of assets and liabilities
using the enacted tax rates applicable each year.
The
Company utilizes a two-step approach to recognizing and measuring uncertain tax positions (“tax contingencies”). The first
step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than
not that the position will be sustained on audit, including resolution of related appeals or litigation processes. The second step is
to measure the tax benefit as the largest amount, which is more than 50% likely to be realized upon ultimate settlement. The Company
considers many factors when evaluating and estimating its tax positions and benefits, requiring periodic adjustments, which may not accurately
forecast actual outcomes. The Company includes interest and penalties related to tax contingencies in the provision of income taxes in
the operations’ consolidated statements. The Company’s management does not expect the total amount of unrecognized tax benefits
to change significantly in the next twelve (12) months.
Software
Development Costs
By
ASC 985-20, Software development costs, including costs to develop software sold, leased, or otherwise marketed, are capitalized after
establishing technological feasibility, if significant. The Company amortizes the capitalized software development costs using the straight-line
amortization method over the application software’s estimated useful life. By the end of February 2016, the Company completed the
technical feasibility of the Condor FX Back Office, Condor Pro Multi-Asset Trading Platform Version, and Condor Pricing Engine. The Company
established the technical feasibility of the Crypto Web Trader Platform in February 2018. The Company completed the technical feasibility
of the Condor Investing and Trading App in January 2021. The Company estimates the useful life of the software to be three (3) years.
Amortization
expense was $19,032 and $68,616 for the three months ended September 30, 2022, and 2021 respectively, and the Company classifies such
cost as the Cost of Sales. Amortization expense was $140,019 and $205,847 for the nine months ended September 30, 2022, and 2021 respectively,
and the Company classifies such cost as the Cost of Sales.
The
Company is developing the Condor Investing and Trading App and NFT Marketplace. The Company is currently capitalizing the costs associated
with the development. The R and D costs in the period ending September 30, 2022, were due to evaluating the technological feasibility
costs of the Robo Advice Platform. The R and D costs in the period ending September 30, 2021, were due to evaluating the technological
feasibility costs of the Condor Investing and Trading App.
The
Company capitalizes major costs incurred during the application development stage for internal-use software.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Convertible
Debentures
The
cash conversion guidance in ASC 470-20, Debt with Conversion and Other Options, is considered when evaluating the accounting for convertible
debt instruments (this includes certain convertible preferred stock that is classified as a liability) to determine whether the conversion
feature should be recognized as a separate component of equity. The cash conversion guidance applies to all convertible debt instruments
that, upon conversion, may be settled entirely or partially in cash or other assets where the conversion option is not bifurcated and
separately accounted for pursuant to ASC 815.
If
the conversion features of conventional convertible debt provide a conversion rate below market value, this feature is characterized
as a beneficial conversion feature (“BCF”). The Company records BCF as a debt discount pursuant to ASC Topic 470-20, Debt
with Conversion and Other Options. In those circumstances, the convertible debt is recorded net of the discount related to the BCF. The
Company amortizes the discount to interest expense over the life of the debt using the effective interest method.
As
of December 31, 2020, the conversion features of conventional FRH Group convertible notes dated February 22, 2016, May 16, 2016, November
17, 2016, and April 24, 2017 (See Note 8) provide for a rate of conversion where the conversion price is below the market value. As a
result, the conversion feature on all FRH Group convertible notes has a beneficial conversion feature (“BCF”) to the extent
of the price difference.
As
the Company and FRH Group extended the maturity date of the four (4) tranches of convertible notes to September 30, 2021, Management
analyzed the fair value of the BCF on these tranches. The Company noted that the value of the BCF for each note was insignificant; thus,
it did not record debt discounts as of December 31, 2020.
For
FRH Group convertible note dated April 24, 2017, the stock’s value at the issuance date was above the floor conversion price; this
feature is characterized as a beneficial conversion feature (“BCF”). The Company records a BCF as a debt discount pursuant
to ASC Topic 470-20, “Debt with Conversion and Other Options.” As a result, the convertible debt is recorded net of the discount
related to the BCF. As of December 31, 2017, the Company has amortized the discount of $97,996 to interest expense at the issuance date
because the debt is convertible at issuance.
The
$97,996 amount is equal to the intrinsic value, and the Company allocated it to additional paid-in capital in 2017.
Foreign
Currency Translation and Re-measurement
The
Company translates its foreign operations to US dollar following ASC 830, “Foreign Currency Matters.”
We
have translated the local currency of ADS, the Australian Dollar (“AUD”), into US$1.00 at the following exchange rates for
the respective dates:
The
exchange rate at the reporting end date:
SCHEDULE OF EXCHANGE RATE
| | |
September 30, 2022 | |
| USD: AUD | |
$ | 1.5647 | |
Average
exchange rate for the period:
| |
|
July
1, 2022, to
September
30, 2022 |
|
| USD: AUD |
|
$ |
1.436 |
|
The
Company subsidiary’s functional currency is AUD, and reporting currency is the US dollar.
The
Company translates its records into USD as follows:
| |
● |
Assets
and liabilities at the rate of exchange in effect at the balance sheet date |
| |
● |
Equities
at the historical rate |
| |
● |
Revenue
and expense items at the average rate of exchange prevailing during the period |
Fair
Value
The
Company uses current market values to recognize certain assets and liabilities at a fair value. The fair value is the estimated price
at which the Company can sell the asset or settle a liability in an orderly transaction to a third party under current market conditions.
The Company uses the following methods and valuation techniques for deriving fair values:
Market
Approach – The market approach uses the prices associated with actual market transactions for similar or identical assets and liabilities
to derive a fair value.
Income
Approach – The income approach uses estimated future cash flows or earnings, adjusted by a discount rate representing the time
value of money and the risk of cash flows not being achieved to derive a discounted present value.
Cost
Approach – The cost approach uses the estimated cost to replace an asset adjusted for the obsolescence of the existing asset.
The
Company ranks the fair value hierarchy of information sources from Level 1 (best) to Level 3 (worst). The Company uses these three levels
to select inputs for valuation techniques:
| Level
I |
|
Level
2 |
|
Level
3 |
| Level 1 is a quoted price
for an identical item in an active market on the measurement date. Level 1 is the most reliable evidence of fair value and is used
whenever this information is available. |
|
Level 2 is directly or
indirectly observable inputs other than quoted prices. An example of a Level 2 input is a valuation multiple for a business unit
based on comparable companies’ sales, EBITDA, or net income. |
|
Level 3 is an unobservable
input. It may include the company’s data, adjusted for other reasonably available information. Examples of a Level 3 input
are an internally-generated financial forecast. |
Basic
and Diluted Income (Loss) per Share
The
Company follows ASC 260, Earnings Per Share, to account for earnings per share. Basic earnings per share (“EPS”) calculations
are determined by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings
per share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share
equivalents outstanding. As of September 30, 2022, and December 31, 2021, the Company had 148,525,500, and 141,811,264 basic and dilutive
shares issued and outstanding. The Company converted the four FRH Group convertible notes into 12,569,080 dilutive shares. During the
nine months ended September 30, 2022, and 2021, common stock equivalents were anti-dilutive due to a net loss of $1,002,849 and $977,933,
respectively, for the period. During the nine months ended September 30, 2022, common stock equivalents were anti-dilutive due to a net
loss. Hence, the Company has not considered it in the computation.
Reclassifications
We
have reclassified certain prior period amounts to conform to the current year’s presentation. None of these classifications impacted
reported operating loss or net loss for any period presented.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent
Accounting Pronouncements
In
May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition
requirements in Topic 605, Revenue Recognition, including most industry-specific requirements. ASU 2014-09 establishes a five-step revenue
recognition process; an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects
the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires enhanced
disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from customers’ contracts. In August
2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the
effective date of ASU 2014-09 by one (1) year. The Company adopted ASC 606 using the modified retrospective method applied to all contracts
not completed as of January 1, 2019. The Company presents results for reporting periods beginning after January 1, 2019, under ASC 606,
while prior period amounts are reported following legacy GAAP. Refer to Note 2 Revenue from Major Contracts with Customers for further
discussion on the Company’s accounting policies for revenue sources within the scope of ASC 606.
In
February 2016, the FASB issued ASU 2016-02, Leases (Topic 840) to increase transparency and comparability among organizations by recognizing
lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments to
this standard are effective for fiscal years beginning after December 15, 2019. Early adoption of the amendments in this standard is
permitted for all entities. The Company must recognize and measure leases at the beginning of the earliest period presented using a modified
retrospective approach. The Company adopted this policy as of January 1, 2020, and there is no material effect on its financial reporting.
In
August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements
for Fair Value Measurement.” The amendments modify the disclosure requirements in Topic 820 to add disclosures regarding changes
in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value
measurements, and the narrative description of measurement uncertainty. The amendments removed and modified certain disclosure requirements
in Topic 820. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal
years. Certain amendments are to be applied prospectively, while others are to be applied retrospectively. Early adoption is permitted.
The
Company adopted the ASU 2018-13 as of January 1, 2020. The Company used the Level 1 Fair Market Measurement to record, at cost, ADS’
intangible assets valued at $2,550,003. We evaluate acquired intangible assets for impairment at least annually to confirm if the carrying
amount of acquired intangible assets exceeds their fair value. The acquired intangible assets primarily consist of assets under management,
wealth management license, and our technology. We use various qualitative or quantitative methods for these impairment tests to estimate
the fair value of our acquired intangible assets. If the fair value is less than its carrying value, we would recognize an impairment
charge for the difference. The Company did not record impairment for September 30, 2022, and the fiscal year ended December 31, 2021.
ASU
2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in
Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”,
issued in August 2020 simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to
present certain conversion features in equity separately. In addition, the amendments also simplify the guidance in ASC Subtopic 815-40,
Derivatives and Hedging: Contracts in Entity’s Own Equity, by removing certain criteria that must be satisfied to classify a contract
as equity, which is expected to decrease the number of freestanding instruments and embedded derivatives accounted for as assets or liabilities.
Finally, the amendments revise the guidance on calculating earnings per share, requiring the use of the if-converted method for all convertible
instruments and rescinding an entity’s ability to rebut the presumption of share settlement for instruments that may be settled
in cash or other assets. The amendments are effective for public companies for fiscal years beginning after December 15, 2021. Early
adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The guidance must be adopted as of the beginning
of the fiscal year of adoption. The Company does not expect this ASU 2020-06 to impact its condensed consolidated financial statements.
Other
recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the United States Securities and Exchange
Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated
financial statements.
NOTE
3. MANAGEMENT’S PLANS
The
Company has prepared consolidated financial statements on a going concern basis, which contemplates the realization of assets and the
settlement of liabilities and commitments in the ordinary business course. At September 30, 2022, and December 31, 2021, the accumulated
deficit was $4,205,663 and $3,230,679, respectively. At September 30, 2022, and December 31, 2021, the working capital deficit was $730,545
and $199,132, respectively. The increase in the working capital deficit was mainly due to the issuance of the short-term promissory note,
increasing current liabilities.
During
the three months ended September 30, 2022, and 2021, the Company incurred a net loss of $217,432 and $490,391. During the nine months
ended September 30, 2022, and 2021, the Company incurred a net loss of $1,002,849 and $977,933.
Since
its inception, the Company has sustained recurring losses and negative cash flows from operations. As of September 30, 2022, and December
31, 2021, the Company had $246,064 and $93,546 cash on hand. The Management believes that future cash flows may not be sufficient for
the Company to meet its debt obligations as they become due in the ordinary course of business for twelve (12) months following September
30, 2022. Even though Company’s revenues have increased considerably following the acquisition of ADS, we continue to experience
a low gross and net margin from current operations. As a result, the Company continues to experience negative cash flows from operations
and the ongoing requirement for substantial additional capital investment to develop its financial technologies. The Management expects
that it will need to raise significant additional capital to accomplish its growth plan over the next twelve (12) months. The Management
expects to seek to obtain additional funding through private equity or public markets. However, there can be no assurance about the availability
or terms of such financing, and capital might be available.
The
Company’s ability to continue as a going concern may depend on the Management’s plans discussed below. The consolidated financial
statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and liabilities
that might be necessary should the Company be unable to continue as a going concern.
To
the extent the Company’s operations are insufficient to fund the Company’s capital requirements, the Management may attempt
to enter into a revolving loan agreement with financial institutions or raise capital through the sale of additional capital stock or
issuance of debt.
The
Management intends to continue its efforts to enhance its revenue from its diversified portfolio of technological solutions, become cash
flow positive, and raise funds through private placement offerings and debt financing. See Note 8 for Notes Payable. As the Company increases
its customer base globally, it intends to acquire long-lived assets that will provide a future economic benefit beyond fiscal 2022.
On
January 27, 2022, the Company signed a promissory note (‘AJB Note’) with AJB Capital Investments, LLC (‘AJB Capital’),
a Delaware limited liability company, for the principal amount of $550,000 with a maturity date of July 27, 2022, and a coupon of 10%.
The parties extended the AJB Note maturity date by another six months till January 23, 2023. As part of the AJB Note, the Company entered
into a securities purchase agreement, where AJB Capital will receive equity equal to US $155,000 of the Company’s common stock.
The Company issued 2,214,286 common stock priced at $.07 per share upon issuance of the Note (the “Shares”) and 1,000,000
3-year cash warrants (‘Warrants’) priced at $0.30. The Warrants and the Shares, collectively known as the ‘Incentive
Fee,’ are issued upon execution of the agreement.
NOTE
4. CAPITALIZED SOFTWARE COSTS
During
the three months ended September 30, 2022, and 2021, the estimated remaining weighted-average useful life of the Company’s capitalized
software was three (3) years. The Company recognizes amortization expenses for capitalized software on a straight-line basis.
At
September 30, 2022, and December 31, 2021, the gross capitalized software asset was $1,491,383 and $1,317,158, respectively. At the end
of September 30, 2022, and 2021, the accumulated software amortization expenses were $806,315 and $460,450, respectively. As a result,
the unamortized balance of capitalized software on September 30, 2022, and December 31, 2021, was $685,067 and $650,862.
NOTE
5. RELATED PARTY TRANSACTIONS
In
April 2016, the Company established its wholly-owned subsidiary – FRH Prime Ltd. (“FRH Prime”), a company incorporated
under section 14 of Bermuda’s Companies Act 1981. In January 2017, FRH Prime established its wholly-owned subsidiary – FXClients
Limited (“FXClients”), under the United Kingdom Companies Act. The Company established FRH Prime and FXClients to conduct
financial technology service activities. The Company established FRH Prime and FXClients to conduct financial technology service activities.
At present, both companies have ceased to exist.
For
the fiscal year ended December 31, 2021, and 2020, FRH Prime has generated volume rebates of $0 and $1,861 from the Condor Risk Management
Back Office Platform. The Company has included rebates in revenue in the consolidated income statements.
Between
February 22, 2016, and April 24, 2017, the Company borrowed $1,000,000 from FRH Group, a founder and principal shareholder (“FRH
Group”). The Company executed Convertible Promissory Notes due between April 24, 2019, and September 30, 2019. The Notes are convertible
into common stock initially at $0.10 per share but may be discounted under certain circumstances, but in no event will the conversion
price be less than $0.05 per share. The Notes carry an interest rate of 6% per annum, which is due and payable at maturity.
Between
March 15 and 21, 2017, subject to the terms and conditions of the Stock Purchase Agreement, the Company issued 1,000,000 shares to Susan
Eaglstein and 400,000 shares to Brent Eaglstein at $0.05 per share, a cumulative cash amount of $70,000. Ms. Eaglstein and Mr. Eaglstein
are the Mother and Brother of Mitchell Eaglstein, the Company’s CEO and Director.
On
February 22, 2021, the Company entered into an Assignment of Debt Agreement (the “Agreement”) with FRH and FRH Group Corporation.
The Company eliminated all four FRH Group convertible notes, including interest, of $1,256,908, in return for the issuance of 12,569,080
of unregistered common stock of the Company (the “Shares”) to FRH. Following the Agreement, FRH assigned the Shares to FRH
Group Corporation, an entity also owned by Mr. Hong.
The
Company paid off all the outstanding related parties’ liabilities as of January 31, 2022.
NOTE
6. LINE OF CREDIT
As
of June 24, 2016, the Company obtained an unsecured revolving line of credit of $40,000 from Bank of America to fund various purchases
and travel expenses. The line of credit has an average interest rate at the close of business on September 30, 2022, for purchases and
cash withdrawals at 12% and 25%, respectively. As of September 30, 2022, the Company complies with the credit line’s terms and
conditions. At September 30, 2022, and December 31, 2021, the outstanding balance was $41,577 and $39,246, respectively.
NOTE
7. NOTES PAYABLE
Convertible
Notes Payable – Related Party
Between
February 22, 2016, and April 24, 2017, the Company borrowed $1,000,000 from FRH Group, a founder and principal shareholder. The Company
executed Convertible Promissory Notes, due between April 24, 2019, and September 30, 2019. The Notes are convertible into common stock
initially at $0.10 per share but may be discounted under certain circumstances, but in no event will the conversion price be less than
$0.05 per share. The Notes carry an interest rate of 6% per annum, which is due and payable at maturity. The parties extended the Notes’
maturity date to September 30, 2021.
At
December 31, 2020, the current portion of convertible notes payable and accrued interest was $1,000,000 and $256,908, respectively. There
was no non-current portion of convertible notes payable and accrued interest.
At
December 31, 2019, the current portion of convertible notes payable and accrued interest was $1,000,000 and $196,908, respectively. There
was no non-current portion of convertible notes payable and accrued interest.
At
December 31, 2020, there was no non-current portion of the Notes payable and accrued interest.
The
Company will pay the Notes’ outstanding principal amount, together with interest at 6% per annum, in cash on the Maturity Date
to this Note’s registered holder. In the event the Company does not make, when due, any payment, when due, of principal or interest
required to be made, the Company will pay, on-demand, interest on the amount of any overdue payment of principal or interest for the
period following the due date of such payment, at a rate of ten percent (10%) per annum.
NOTE
7. NOTES PAYABLE (continued)
Convertible
Notes Payable – Related Party
On
February 22, 2016, the Company issued and promised to pay a convertible note to FRH Group for the principal sum of One Hundred Thousand
and 00/100 Dollars ($100,000) on February 28, 2018 (the “Original Maturity Date”). The initial conversion rate will be $0.10
per share or 1,000,000 shares if FRH Group converts the entire Note, subject to adjustments in certain events as set forth below. For
example, the Company’s common stock’s fair market value is less than $0.10 per share. In that case, the conversion price
shall be discounted by 30%, but in no event will the conversion price be less than $0.05 per share with a maximum of 2,000,000 shares
if FRH Group converts the entire Note subject to adjustments in certain events. No fractional Share or scrip representing a fractional
Share will be issued upon conversion of the Notes.
On
May 16, 2016, the Company issued and promised to pay a convertible note to FRH Group for the principal sum of Four Hundred Thousand and
00/100 Dollars ($400,000) on May 31, 2018 (the “Original Maturity Date”). The initial conversion rate will be $0.10 per share
or 4,000,000 shares if FRH Group converts the entire Note, subject to adjustments in certain events as set forth below. For example,
the Company’s common stock’s fair market value is less than $0.10 per share. In that case, the conversion price shall be
discounted by 30%, but in no event will the conversion price be less than $0.05 per share with a maximum of 8,000,000 shares if FRH Group
converts the entire Note, subject to adjustments in certain events. No fractional Share or scrip representing a fractional Share will
be issued upon conversion of the Notes.
On
November 17, 2016, the Company issued and promised to pay a convertible note to FRH Group for the principal sum of Two Hundred and Fifty
Thousand and 00/100 Dollars ($250,000) on November 30, 2018 (the “Original Maturity Date”). The initial conversion rate would
be $0.10 per share or 2,500,000 shares if the entire Note were converted, subject to adjustments in certain events as set forth below.
For example, the Company’s common stock’s fair market value is less than $0.10 per share. In that case, the conversion price
shall be discounted by 30%, but in no event will the conversion price be less than $0.05 per share with a maximum of 5,000,000 shares
if FRH Group converts the entire Note, subject to adjustments in certain events. No fractional Share or scrip representing a fractional
Share will be issued upon conversion of the Notes.
On
April 24, 2017, the Company issued and promised to pay a convertible note to FRH Group for the principal sum of Two Hundred and Fifty
Thousand and 00/100 Dollars ($250,000) on April 24, 2019 (the “Original Maturity Date”). The initial conversion rate will
be $0.10 per share or 2,500,000 shares if FRH Group converts the entire Note, subject to adjustments in certain events as set forth below.
For example, the Company’s common stock’s fair market value is less than $0.10 per share. In that case, the conversion price
shall be discounted by 30%, but in no event will the conversion price be less than $0.05 per share with a maximum of 5,000,000 shares
if the entire Note was converted, subject to adjustments in certain events. No fractional Share or scrip representing a fractional Share
will be issued upon conversion of the Notes.
NOTE
7. NOTES PAYABLE (continued)
FRH
Group Note Summary
SCHEDULE
OF NOTES PAYABLE
| Date of Note: | |
2/22/2016 | | |
5/16/2016 | | |
11/17/2016 | | |
4/24/2017 | |
| Original Amount of Note: | |
$ | 100,000 | | |
$ | 400,000 | | |
$ | 250,000 | | |
$ | 250,000 | |
| Outstanding Principal Balance: | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| Conversion Date (1): | |
| 02/22/2021 | | |
| 02/22/2021 | | |
| 02/22/2021 | | |
| 02/22/2021 | |
| Interest Rate: | |
| 6 | % | |
| 6 | % | |
| 6 | % | |
| 6 | % |
| Date to which interest has been paid: | |
| Accrued | | |
| Accrued | | |
| Accrued | | |
| Accrued | |
| Conversion Rate on February 22, 2021: | |
$ | 0.10 | | |
$ | 0.10 | | |
$ | 0.10 | | |
$ | 0.10 | |
| Floor Conversion Price: | |
$ | 0.05 | | |
$ | 0.05 | | |
$ | 0.05 | | |
$ | 0.05 | |
| Number Shares Converted for Original Note: | |
| 1,000,000 | | |
| 4,000,000 | | |
| 2,500,000 | | |
| 2,500,000 | |
| Number Shares Converted for Interest: | |
| 29,117 | | |
| 111,000 | | |
| 61,792 | | |
| 55,000 | |
| (1) |
Note Extension –
On February 22, 2021, the Company entered into an Assignment of Debt Agreement (the “Agreement”) with FRH and FRH Group
Corporation. The Company eliminated all four FRH Group convertible notes, including interest, of $1,256,908, in return for the issuance
of 12,569,080 of unregistered common stock of the Company (the “Shares”) to FRH. Following the Agreement, FRH assigned
the Shares to FRH Group Corporation, an entity also owned by Mr. Hong. |
Cares
Act – Paycheck Protection Program (PPP Note)
On
May 01, 2020, the Company received proceeds of Fifty-Thousand Six Hundred and Thirty-Two ($50,632) from the Promissory Note (“PPP
Note”) under the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).
The funding of the PPP Note is conditioned upon approval of the Company’s application by the Small Business Administration (SBA)
and Bank of America (“Bank”), receiving confirmation from the SBA that the Bank may proceed with the PPP Note. Suppose the
SBA does not confirm the PPP Note’s forgiveness, or only partly confirms forgiveness of the PPP Note, or the Company fails to apply
for PPP Note forgiveness. In that case, the Company will be obligated to repay to the Bank the total outstanding balance remaining due
under the PPP Note, including principal and interest (the “PPP Note Balance”). In such case, Bank will establish the terms
for repayment of the PPP Note Balance in a separate letter to be provided to the Company, which letter will set forth the PPP Note Balance,
the amount of each monthly payment, the interest rate (not above a fixed rate of one percent (1.00%) per annum), the term of the PPP
Note, and the maturity date of two (2) years from the funding date of the PPP Note. No principal or interest payments will be due before
the Deferment Period, which is ten months from the end of the covered period. The Company plans to apply for PPP Note forgiveness.
SBA
Loan
On
May 22, 2020, the Company received hundred and forty-four thousand nine hundred and 00/100 Dollars ($144,900). The installment payments
will include the principal and interest of $707 monthly and begin Twelve (12) months from the promissory note date. The principal and
interest balance will be payable Thirty (30) years from the promissory Note date. Interest will accrue at the interest rate of 3.75%
per annum and only on the advance date of $144,900 funds advanced from May 22, 2020. The SBA loan outstanding balance is $133,320 as
of September 30, 2022.
AJB
Note
On
January 27, 2022, the Company signed a promissory note (‘AJB Note’) with AJB Capital Investments, LLC (‘AJB Capital’),
a Delaware limited liability company, for the principal amount of $550,000 with a maturity date of July 27, 2022, and a coupon of 10%.
The parties extended the AJB Note maturity date by another six months till January 23, 2023. As part of the AJB Note, the Company entered
into a securities purchase agreement, where AJB Capital will receive equity equal to US $155,000 of the Company’s common stock.
The Company issued 2,214,286 common stock valued at $71,521 upon issuance of the Note (the “Shares”) and 1,000,000 3-year
cash warrants (‘Warrants’) priced at $0.30. The Warrants and the Shares, collectively known as the ‘Incentive Fee,’
are issued upon execution of the agreement.
Economic
Injury Disaster Loan (EIDL)
The
Small Business Administration offers the Economic Injury Disaster Loan program. The CARES Act changed the program to provide an emergency
grant of up to $10,000 per business, which is forgivable like the PPP Note. The Company doesn’t have to repay the grant. On May
14, 2020, the Company received $4,000 in EIDL grants. The Company has recorded it as other income since the EIDL grant is forgivable.
NOTE
8. COMMITMENTS AND CONTINGENCIES
Office
Facility and Other Operating Leases
The
rental expense was $20,323 and $22,765 for the nine months ended September 30, 2022, and 2021, respectively.
From
October 2019 to the present, the Company has rented its servers, computers, and data center from an unrelated third party. Under the
rent Agreement, the lessor provides furniture and fixtures and any leasehold improvements at Irvine Office, as discussed in Note 2.
From
February 2019 to the present, the Company leases office space in Limassol District, Cyprus, from an unrelated party for a year. The office’s
rent payment is $1,750 per month as the General and administrative expenses.
From
February 2020, this agreement continues every year upon written request by the Company. The Company uses the office for sales and marketing
in Europe and Asia. From April 2019 to the present, the Company has leased office space in Chelyabinsk, Russia, from an unrelated party
for an eleven (11) month term. The office’s rent payment is $500 per month, and the Company has included it in the General and
administrative expenses. From March 2020, this agreement continues on a month-to-month basis until the Company or the lessor chooses
to terminate by the agreement’s terms by giving thirty (30) days’ notice. The Company uses the office for software development
and technical support. Effective August 2022, the Company closed its offices in Russia and relocated its team to Turkey.
Employment
Agreement
The
Company gave all salary compensation to key executives as independent contractors, where Eaglstein, Firoz, and Platt committed one hundred
percent (100%) of their time to the Company. The Company has not formalized performance bonuses and other incentive plans. Each executive
is paid every month at the beginning of the month. From September 2018 to September 30, 2020, the Company is paying a monthly compensation
of $5,000 to its CEO and CFO, increasing each succeeding year should the agreement be approved annually. Effective October 1, 2020, the
Company expenses $12,000 monthly to its CEO and CFO.
Accrued
Interest
At
September 30, 2022, and December 31, 2021, the cumulative accrued interest for SBA and other loans defined as an accrued non-current
was $13,363, and $9,224, respectively.
Pending
Litigation
The
management is not aware of any actions, suits, investigations, or proceedings (public or private) pending against, threatened against,
or affecting any of the assets or affiliates of the Company.
Tax
Compliance Matters
The
Company has estimated payroll tax liabilities based on its officers’ reclassification from independent contractors to employees
from the fiscal ended December 31, 2017, to 2020. As of September 30, 2022, the Company has assessed federal and state payroll tax payments
in the aggregate amount of $194,936, and we have included it in the General and administrative expenses.
NOTE
9. STOCKHOLDERS’ EQUITY (DEFICIT)
Authorized
Shares
On
February 12, 2021, the Company filed the Certificate of Amendment with the Secretary of State of Deleware to change authorized shares.
As per the Amendment, the Company shall have the authority to issue 260,000,000 shares, consisting of 250,000,000 shares of Common Stock
having a par value of $.0001 per share and 10,000,000 shares of Preferred Stock having a par value of $.0001 per share.
On
February 17, 2022, the Company filed the Information Statement pursuant to Section 14C of the Securities Exchange Act of 1934 and informed
all holders of record on February 10, 2022 (the “Record Date”) of the common stock, $0.0001 par value per share (the “Common
Stock”), of the Company, in connection with the approval of the following actions taken by the Board of Directors of the Company
(the “Board”) and by written consent of the holders of a majority of the voting power of Company’s issued and outstanding
capital stock (the “Approving Stockholders”):
| 1. |
To amend our certificate
of incorporation, as amended (the “Certificate”), to increase the number of authorized shares of common stock from 250,000,000
to 500,000,000 (the “Authorized Share Increase” and together with the 2022 Equity Plan, the “Corporate Action”),
and |
| |
|
| 2. |
To approve the Company’s
2022 Equity Plan (the “2022 Equity Plan”) |
On
February 10, 2022, our Board unanimously approved the Corporate Actions. To eliminate the costs and management time for a special meeting
and to effect the actions, the Company chose to obtain the written consent of a majority of the Company’s voting power to approve
the actions described in the Information Statement following Sections 228 and 242 of the Delaware General Corporation Law (the “DGCL”)
and per our bylaws. On February 10, 2022, the Approving Stockholders approved the Corporate Actions by written consent. The Approving
Stockholders (common stock only) own 96,778,105 shares, representing 64.62% of the Company’s total issued and outstanding voting
power.
As
of September 30, 2022, and December 31, 2021, the Company’s authorized capital stock consists of 10,000,000 shares of preferred
stock, a par value of $0.0001 per share, and 250,000,000 shares of common stock, a par value of $0.0001 per share.
As
of September 30, 2022, and December 31, 2021, the Company had 183,025,550 and 141,811,264, respectively, common shares issued and outstanding
and 4,000,000 preferred shares issued and outstanding.
The
preferred stock has fifty votes for each share of preferred shares owned. The preferred shares have no other rights, privileges, and
higher claims on the Company’s assets and earnings than common stock.
Preferred
Stock
On
December 12, 2016, the Board agreed to issue 2,600,000, 400,000, and 1,000,000 shares of Preferred Stock to Mitchell Eaglstein, Imran
Firoz, and FRH Group, respectively, as the founders in consideration of services rendered to the Company. As of September 30, 2022, the
Company had 4,000,000 preferred shares issued and outstanding.
Common
Stock
On
January 21, 2016, the Company collectively issued 30,000,000 and 5,310,000 common shares at par value to On January 21, 2016, the Company
collectively issued 30,000,000 and 5,310,000 common shares at par value to Mitchell Eaglstein and Imran Firoz, respectively, as the founders
in consideration of services rendered to the Company.
On
December 12, 2016, the Company issued 28,600,000 common shares to the remaining two (2) founding members.
On
March 15, 2017, the Company issued 1,000,000 restricted common shares for platform development valued at $50,000. The Company issued
the securities with a restrictive legend.
On
March 15, 2017, the Company issued 1,500,000 restricted common shares for professional services to three (3) individuals valued at $75,000.
The Company issued the securities with a restrictive legend.
On
March 17, 2017, subject to the terms and conditions of the Stock Purchase Agreement, the Company issued 1,000,000 shares to Susan Eaglstein
for a cash amount of $50,000. The Company issued the securities with a restrictive legend.
NOTE
9. STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
On
March 21, 2017, subject to the terms and conditions of the Stock Purchase Agreement, the Company issued 400,000 shares to Bret Eaglstein
for a cash amount of $20,000. The Company issued the securities with a restrictive legend.
Ms.
Eaglstein and Mr. Eaglstein are the Mother and Brother, respectively, of Mitchell Eaglstein, the CEO and Director of the Company.
From
July 1, 2017, to October 03, 2017, the Company has issued 653,332 units for a cash amount of $98,000 under its offering Memorandum, where
the unit consists of one (1) share of common stock and one Class A warrant (See Note 11).
On
October 31, 2017, the Company issued 70,000 restricted common shares to management consultants valued at $10,500. The Company issued
the securities with a restrictive legend.
On
January 15, 2019, the Company issued 60,000 restricted common shares for professional services to eight (8) consultants valued at $9,000.
From
January 29, 2019 to February 15, 2019, the Company issued 33,000 registered shares under the Securities Act of 1933 for a cash amount
of $4,950. On February 26, 2019, the Company filed the Post-Effective Amendment No. 1 (the “Amendment”) related to the Registration
Statement on Form S-1and its amendments thereto, filed with the U.S. Securities and Exchange Commission on November 22, 2017 and declared
effective on August 7, 2018 (Registration No. 333-221726) (the “Registration Statement”) of FDCTech, Inc., a Delaware corporation
(the “Registrant”), amended the Registration Statement to remove from registration all shares of common stock that were offered
for sale by the Registrant but were not sold prior to the termination of the offering made pursuant to the Registration Statement. At
the termination of the offering made pursuant to the Registration Statement, 2,967,000 shares of common stock that were offered for sale
by the Registrant were not sold or issued.
Effective
June 3, 2020, the Company issued 2,745,053 shares to Benchmark Investments, Inc. (“Broker-Dealer” or “Kingswood Capital
Markets”) of common stock at $0.25 per share for a total value of $686,263. The Broker-Dealer is retained to provide general financial
advisory to the Company for the next twelve months. The Company has expensed the prepaid compensation through the income statement following
a regular straight-line amortization schedule over the contract’s life, which is for twelve months—when Kingswood Capital
Markets presumably will produce benefits for the Company. On August 25, 2020, the Company and Broker-Dealer terminated all obligations
other than maintaining confidentiality, with no fees due by the Company to the Broker-Dealer. The Broker-Dealer returned the 2,745,053
shares of the Company’s common stock as of December 31, 2020.
On
October 1, 2020, the Company issued 250,000 restricted common shares to a digital marketing consultant valued at $30,000. The Company
issued the securities with a restrictive legend.
On
January 31, 2021, the Company issued 2,300,000 restricted common shares for professional services to two (2) consultants valued at $621,000.
On
February 22, 2021, the Company entered into an Assignment of Debt Agreement (the “Agreement”) with FRH and FRH Group Corporation.
The Company eliminated all four FRH Group convertible notes, including interest, of $1,256,908, in return for the issuance of 12,569,080
of unregistered common stock of the Company (the “Shares”) to FRH. Following the Agreement, FRH assigned the Shares to FRH
Group Corporation, an entity also owned by Mr. Hong.
On
May 19, 2021, the Company issued 1,750,000 restricted common shares for professional services to a consultant valued at $350,000.
On
June 02, 2021, the Company issued 1,750,000 restricted common shares for Genesis Agreement to a consultant valued at $437,500. As the
Genesis Agreement did not materialize, the Consultant returned the shares to the treasury.
On
June 15, 2021, the Company issued 100,000 restricted common shares to a board member for services to a consultant valued at $21,000.
On
July 06, 2021, the Company issued 100,000 restricted common shares to a board member for services to a consultant valued at $22,000.
On
July 20, 2021, the Company issued 545,852 restricted common shares for professional services to a consultant valued at $98,253.
On
October 04, 2021, the Company filed a prospectus related to the resale of shares to White Lion and AD Securities America, LLC. The Company
issued 2,000,000 shares to AD Securities America, LLC for $200,000. The Company has not received the cash as of the date of the report.
The Company issued 670,000 registered shares to White Lion as consideration shares valued at $80,400.
On
October 5, 2021, the Company issued 1,500,000 restricted common shares for professional services to a consultant valued at $164,250.
From
October 2021 to November 2021, the Company issued 750,000 registered shares to White Lion for a gross cash amount of $62,375.
On
December 22, 2021, the Company issued 45,000,000 restricted common shares to ADFP to acquire a 51% controlling interest in AD Advisory
Service Pty Ltd, Australia’s regulated wealth management company.
In
December 2021, the Company issued 5,650,000 restricted common shares to two board members, a consultant, and two officers, for services
and software development valued at $169,500.
On
January 4, 2022, the Company issued 1,500,000 restricted common shares for professional services to a consultant valued at $93,750.
From
January 4, 2022, to February 10, 2022, the Company issued 2,500,000 registered shares to White Lion for a gross cash amount of $114,185.
On
January 27, 2022, the Company signed a promissory note (‘AJB Note’) with AJB Capital Investments, LLC (‘AJB Capital’).
The Company issued 2,214,286 common stock valued at $71,521 upon issuance of the Note (the “Shares”) and 1,000,000 3-year
cash warrants (‘AJB Warrants’) priced at $0.30 as consideration fees for AJB Note. The AJB Warrants and the Shares, collectively
known as the ‘Incentive Fee,’ are issued upon execution of the agreement. As of September 30, 2022, all AJB Warrants are
out-of-money and not exercised.
On
September 30, 2022, the Company issued 30,000,000 restricted common shares for cash valued at $300,000.
On
September 30, 2022, the Company issued 5,000,000 restricted common shares to Gope S. Kundnani for services valued at $60,000.
NOTE
10. WARRANTS
Effective
June 1, 2017, the Company is raising $600,000 through a Private Placement Memorandum (the “Memorandum”) of up to 4,000,000
Units. Each unit (a “Unit”) consists of one (1) share of Common Stock, par value $.0001 per share (the “Common Stock),
and one (1) redeemable Class A Warrant (the “Class A Warrant(s)”) of the Company. The Company closed the private placement
effective December 15, 2017.
Each
Class A Warrant entitles the holder to purchase one (1) share of Common Stock for $0.30 per share until April 30, 2019 (‘Expiration
Date’). The Company issued the securities with a restrictive legend.
Information
About the Warrants Outstanding During Fiscal 2022 Follows
SCHEDULE OF WARRANTS ACTIVITY
Original Number of Warrants Issued | | |
Exercise
Price per
Common
Share | | |
Exercisable at December
31, 2020 | | |
Became
Exercisable | | |
Exercised | | |
Terminated /
Canceled /
Expired | | |
Exercisable
At September
30, 2022 | | |
Expiration
Date |
| | 653,332 | | |
$ | 0.30 | | |
| - | | |
| - | | |
| - | | |
| 653,332 | | |
| - | | |
April 2019 |
The
Warrants are redeemable by the Company, upon thirty (30) day notice, at a price of $.05 per Warrant, provided the average of the closing
bid price of the Common Stock, as reported by the National Association of Securities Dealers Automated Quotation (“NASDAQ”)
System (or the average of the last sale price if the Common Stock is then listed on the NASDAQ National Market System or a securities
exchange), shall equal or exceed $1.00 per share (subject to adjustment) for ten (10) consecutive trading days prior to the date on which
the Company gives notice of redemption. The holders of Warrants called for redemption have exercised rights until the close of business
on the date fixed for redemption.
The
exercise price and the number of shares of Common Stock or other securities issuable on exercise of the Warrants are subject to adjustment
in certain circumstances, including stock dividend, recapitalization, reorganization, merger, or consolidation of the Company. However,
no Warrant is subject to adjustment for issuances of Common Stock at a price below the exercise price of that Warrant.
As
of this report’s date, holders did not exercise Class A Warrants, and all Class A Warrants have expired.
The
Company issued 2,214,286 common stock valued at $71,521 upon issuance of the Note (the “Shares”) and 1,000,000 3-year cash
warrants (‘AJB Warrants’) priced at $0.30 as consideration fees for AJB Note. The AJB Warrants and the Shares, collectively
known as the ‘Incentive Fee,’ are issued upon execution of the agreement. As of September 30, 2022, all AJB Warrants are
out-of-money and not exercised.
NOTE
11. OFF-BALANCE SHEET ARRANGEMENTS
We
have no off-balance sheet arrangements, including arrangements that would affect our liquidity, capital resources, market risk support,
credit risk support, or other benefits.
NOTE
12. SUBSEQUENT EVENTS
None.
